There was an unmistakable shift in tone in the airline industry this week as the nation’s top carriers all reported record earnings because of lower fuel prices and strong demand for domestic air travel.
The airlines kept their planes full as they reaped the benefits of their years-long drive to consolidate the industry into fewer, bigger carriers. The financial performance was particularly striking because the first quarter is traditionally the weakest of the year.
“We are pleased to report record first-quarter profits, exceeding the prior record set just last year,” said Doug Parker, the chairman and chief executive of American Airlines.
There was a similar theme at United Airlines, Delta Air Lines and Southwest Airlines in the last few days.
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“The business is performing quite well,” Richard Anderson, Delta’s chief executive, said last week.
At Southwest, Gary C. Kelly, the chairman and chief executive, was also gloating about his airline’s financial performance. “We are thrilled to report an exceptionally strong first quarter,” he said Thursday. Net income, he added, “far surpasses any first quarter in our history.”
For all the carriers, the biggest factor by far was the big drop in oil prices in recent months. American paid $1.5 billion for fuel in the first quarter, a drop of more than 40 percent from the period last year, or nearly $1.2 billion less.
United’s fuel bill in the first quarter was 36 percent lower than in the period last year. Delta expects it will save $2 billion in fuel by the end of the year. Southwest paid $2 a gallon for fuel in the first quarter, compared with $3.08 a gallon last year.
Wall Street analysts, who have long been skeptical that airlines could be anything than perennial underperformers, saw encouraging signs at every carrier.
One analyst at Barclays noted that American Airlines had posted better-than-expected revenue, Southwest was reining in its costs, and United, which has struggled since its merger with Continental, seemed to be turning a corner.
For passengers, the downside was that airlines are reaching these records by also increasing fares, packing flights and increasing revenue via baggage and other fees.
Some airline executives foresaw challenges ahead. The sudden drop in fuel prices had led to fuel hedging losses for carriers in the last quarter, and a stronger dollar is hurting ticket sales abroad.